[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






                      OVERSIGHT AND MANAGEMENT OF
                     DEPARTMENT OF ENERGY NATIONAL
                  LABORATORIES AND SCIENCE ACTIVITIES

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 11, 2013

                               __________

                           Serial No. 113-41

                               __________

 Printed for the use of the Committee on Science, Space, and Technology




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




       Available via the World Wide Web: http://science.house.gov

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE

82-220 PDF                WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001




              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                   HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California         EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas                 ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR.,         DANIEL LIPINSKI, Illinois
    Wisconsin                        DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma             FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas              SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas             ERIC SWALWELL, California
PAUL C. BROUN, Georgia               DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi       ALAN GRAYSON, Florida
MO BROOKS, Alabama                   JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois             SCOTT PETERS, California
LARRY BUCSHON, Indiana               DEREK KILMER, Washington
STEVE STOCKMAN, Texas                AMI BERA, California
BILL POSEY, Florida                  ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming              MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona            JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky              MARK TAKANO, California
KEVIN CRAMER, North Dakota           ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS STEWART, Utah
VACANCY
                                 ------                                

                         Subcommittee on Energy

                  HON. CYNTHIA LUMMIS, Wyoming, Chair
RALPH M. HALL, Texas                 ERIC SWALWELL, California
FRANK D. LUCAS, Oklahoma             ALAN GRAYSON, Florida
RANDY NEUGEBAUER, Texas              JOSEPH KENNEDY III, Massachusetts
MICHAEL T. McCAUL, Texas             MARC VEASEY, Texas
RANDY HULTGREN, Illinois             MARK TAKANO, California
THOMAS MASSIE, Kentucky              ZOE LOFGREN, California
KEVIN CRAMER, North Dakota           DANIEL LIPINSKI, Illinois
RANDY WEBER, Texas                   EDDIE BERNICE JOHNSON, Texas
LAMAR S. SMITH, Texas






                            C O N T E N T S

                        Thursday, July 11, 2013

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Cynthia Lummis, Chairman, 
  Subcommittee on Energy, Committee on Science, Space, and 
  Technology, U.S. House of Representatives......................    10
    Written Statement............................................    10

Statement by Representative Eric Swalwell, Ranking Minority 
  Member, Subcommittee on Energy, Committee on Science, Space, 
  and Technology, U.S. House of Representatives..................    11
    Written Statement............................................    11

                               Witnesses:

Mr. Matthew Stepp, Senior Policy Analyst, Information Technology 
  and Innovation Foundation
    Oral Statement...............................................    13
    Written Statement............................................    15

Mr. Jack Spencer, Senior Research Fellow, The Heritage Foundation
    Oral Statement...............................................    19
    Written Statement............................................    22

    Joint Written Statement of Mr. Matthew Stepp, Senior Policy 
      Analyst, Information Technology and Innovation Foundation, 
      and Mr. Jack Spencer, Senior Research Fellow, The Heritage 
      Foundation.................................................    28

Dr. Thom Mason, Director, Oak Ridge National Laboratory
    Oral Statement...............................................    61
    Written Statement............................................    63

Dr. Dan Arvizu, Director, National Renewable Energy Laboratory
    Oral Statement...............................................    70
    Written Statement............................................    72

Discussion.......................................................    81

             Appendix I: Answers to Post-Hearing Questions

Joint responses from Mr. Matthew Stepp, Senior Policy Analyst, 
  Information Technology and Innovation Foundation, and Mr. Jack 
  Spencer, Senior Research Fellow, The Heritage Foundation.......    96

Mr. Jack Spencer, Senior Research Fellow, The Heritage Foundation   102

Dr. Thom Mason, Director, Oak Ridge National Laboratory..........   105

Dr. Dan Arvizu, Director, National Renewable Energy Laboratory...   111

            Appendix II: Additional Material for the Record

Submitted letter for the record from the Secretary of Energy, Dr. 
  Ernest Moniz...................................................   118

 
                 OVERSIGHT AND MANAGEMENT OF DEPARTMENT
                    OF ENERGY NATIONAL LABORATORIES
                         AND SCIENCE ACTIVITIES

                              ----------                              


                        THURSDAY, JULY 11, 2013

                  House of Representatives,
                                     Subcommittee on Energy
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.

    The Subcommittee met, pursuant to call, at 9:56 a.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Cynthia 
Lummis [Chairman of the Subcommittee] presiding.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Chairman Lummis. Well, we are, as I said, going to dispense 
with some of the formalities. The Ranking Member just walked in 
and we are delighted you are here this morning.
    Welcome to today's Energy Subcommittee hearing entitled 
``Oversight and Management of Department of Energy National 
Labs and Science Activities.'' Last month, we held a Full 
Committee hearing with our new Energy Secretary Ernest Moniz. 
At the hearing, Secretary Moniz announced that he would be 
undertaking a number of management and performance reforms 
aimed at enhancing the Department's organizational 
effectiveness and programmatic oversight and accountability.
    So we are really excited about this undertaking, and the 
primary purpose of today's hearing is to receive testimony on 
the specific reforms that Congress and the Administration may 
be able to work together to advance.
    I am going to take the remainder of my opening remarks and 
submit them for the record and waive the remainder of my 
opening remarks for the record and ask our Ranking Member, Mr. 
Swalwell of California, if he has any opening remarks and then 
we can get right into your testimony so we don't get 
interrupted by our next round of votes. Mr. Swalwell?
    [The prepared statement of Mrs. Lummis follows:]

       Prepared Statement of Subcommittee Chairman Cynthia Lummis
    Good morning and welcome to today's Energy Subcommittee hearing 
entitled Oversight and Management of Department of Energy National 
Laboratories and Science Activities.
    Last month, we held a Full Committee hearing with newly minted 
Energy Secretary Ernest Moniz. At the hearing, Secretary Moniz 
announced that he would be undertaking a number of management and 
performance reforms aimed at enhancing the Department's organizational 
effectiveness and programmatic oversight and accountability.
    We very much welcome this undertaking, and the primary purpose of 
today's hearing is to receive testimony on the specific reforms that 
Congress and the Administration may be able to work together to 
advance.
    On the same week of Secretary Moniz's announcement, three think 
tanks--the Information Technology Innovation Foundation, the Heritage 
Foundation, and the Center for American Progress--released a report 
entitled Turning the Page: Re-imagining the National Labs in the 21st 
Century Innovation Economy. Perhaps ironically, one does not have to 
turn a single page to be intrigued by this report. The simple fact that 
the Heritage Foundation and Center for American Progress were able to 
agree on anything, much less a detailed 70-page report, is a pleasant 
reminder that even in the current polarized environment, opportunities 
for bipartisan policy improvements exist.
    The Reimagining report includes a bevy of bold recommendations, 
including ideas to reduce bureaucracy and micromanagement, enhance 
technology transfer, and change DOE's organizational structure and 
fundamental relationship with the National Labs. The national 
laboratories collectively manage more than $10 billion of scientific 
and national security activities, and major changes such as those being 
proposed by outside stakeholders as well as the Obama Administration 
warrant complete and thoughtful consideration.
    Beginning with their roots in providing the scientific foundation 
upon which America won World War II and the Cold War, the national labs 
have a rich and often underappreciated history. Today, the labs' role 
in sponsoring cutting-edge basic research and managing world-class user 
facilities is a driving force behind the United States' global 
scientific leadership and economic competitiveness. I look forward to 
learning how we can best sustain and advance their important 
contributions to the country.
    To this end, Ranking Member Swalwell and I wrote Secretary Moniz 
requesting his feedback on the recommendations of the Reimagining 
report. We received his response last night, which I would like to 
enter into the record [without objection]. I want to commend the 
Secretary for his prompt response, and note that we also look forward 
to hearing his own forthcoming reform ideas.
    Ultimately, it is my hope that through our discussion today and in 
the coming weeks, we can begin to identify areas of agreement that will 
positively benefit DOE's science enterprise.
    Thank you and I yield back.

    Mr. Swalwell. Sure. Thank you, Chairman Lummis, for holding 
this hearing today. And I want to thank our witnesses for being 
here.
    I represent a district in northern California that has two 
national laboratories, Sandia and Lawrence Livermore, and also 
my colleague Ms. Lofgren from the Silicon Valley area also just 
outside her district but has been a faithful advocate for those 
laboratories as well, which I am always grateful to have an 
ally as a neighbor.
    And just want to highlight that these laboratories employ 
many of our country's brightest minds in science and 
engineering and they continue to inspire, train, and support 
new generations of American researchers and industry leaders. 
They also serve as an important path by which new technologies 
can move to market in ways that benefit its public and private 
partners alike and in turn the American taxpayer.
    And while it is important to recognize the great work being 
done across the country by our national labs, as other 
researchers supported by the Department of Energy programs, it 
is equally important to consider what opportunities exist to 
make improvements. And that is why I look forward to today's 
hearing and for one example I wanted to highlight was the 
recommendation in the report to merge the Department's Under 
Secretary for Energy and Under Secretary for Science into a 
single Under Secretary for Science and Technology, which I 
believe makes a lot of sense as it would finally establish a 
single individual in DOE with both the sole responsibility and 
authority to advance new energy technologies from basic 
research through commercialization activities.
    This report also recommends a number of interesting ways 
that we may be able to accelerate technology transfer and 
improve the efficiency and effectiveness of our labs and I look 
forward to exploring these ideas further with our DOE 
laboratory witnesses shortly. And also just about a three iron 
outside my district is the Berkeley National Lab--Lawrence 
Berkeley National Laboratory as well and I appreciate their 
staffs' effort to continue to update and educate me on the 
great work they are doing there.
    So thank you for holding this hearing, Chairman Lummis. And 
with that, I yield back the balance of my time.
    [The prepared statement of Mr. Swalwell follows:]

    Prepared Statement of Subcommittee Ranking Member Eric Swalwell
    Thank you Chairman Lummis for holding this hearing today, and I 
also want to thank the witnesses for being here.
    It is no secret by now that I am a major supporter of the 
Department of Energy's national laboratories, even a few of the ones 
that aren't in my District. These labs carry out world-class research 
on issues of national and global importance, they employ many of our 
country's brightest minds in science and engineering, and they continue 
to inspire, train, and support new generations of American researchers 
and industry leaders. They also serve as an important path by which new 
technologies can move to market in ways that benefit its public and 
private partners alike, and in turn, the U.S. taxpayer.
    While it is important to recognize the great work being done across 
the country by our national labs as well as other researchers supported 
by Department of Energy programs, it is equally important to consider 
what opportunities exist to make improvements.
    That is why I am excited to learn more about these ideas and 
opportunities at today's hearing. For example, one of the 
recommendations in this report is to merge the Department's Under 
Secretary for Energy and Under Secretary for Science into a single 
Under Secretary for Science & Technology, which I believe makes a lot 
of sense as it would finally establish a single individual in DOE with 
both the sole responsibility and authority to advance new energy 
technologies from basic research through commercialization activities. 
The report also recommends a number of interesting ways that we may be 
able to accelerate technology transfer and improve the efficiency and 
effectiveness of our labs, and I look forward to exploring these ideas 
further with our DOE laboratory witnesses shortly.

    Chairman Lummis. Thank you. If there are any other Members 
who wish to submit additional opening statements, your 
statements will be added to the record at this point. Anyone?
    Chairman Lummis. Thank you. Well, now, we will introduce 
our witnesses. Our first witness today is Mr. Matthew Stepp, 
Senior Policy Analyst with the Information Technology and 
Innovation Foundation. Mr. Stepp previously served at the 
Breakthrough Institute, a think tank focusing on political 
thinking in the 21st century. In 2009 Mr. Stepp was a Fellow at 
the National Academies of Science where he worked on the 
Transportation Research Board. He earned his master's from 
Rochester Institute of Technology.
    Our second witness is Mr. Jack Spencer, Research Fellow at 
the Heritage Foundation's Roe Institute for Economic Policy 
Studies. Previously, he served at the Babcock & Wilcox 
companies where he worked on commercial, civilian, and military 
nuclear energy issues. Prior to this, he worked at the Heritage 
Foundation as an analyst for defense and national security. Mr. 
Spencer earned his master's from the University of Limerick in 
Ireland.
    Our third witness is Dr. Thom Mason, Director of Oak Ridge 
National Laboratory. Dr. Mason joined Oak Ridge in 1998 as 
Science Director of the Spallation Neutron Source Project and 
was named Associate Lab Director in 2001. Before Oak Ridge, Dr. 
Mason was a member of the physics faculty at the University of 
Toronto. He earned his doctorate in condensed matter sciences 
at McMaster University.
    Our final witness is Dr. Dan Arvizu, Director at the 
National Renewable Energy Laboratory. Dr. Arvizu was appointed 
Director in 2005 and was reappointed another six-year term in 
2011. Prior to that, Dr. Arvizu was an executive with Sandia 
National Labs and began his career at AT&T Bell Telephone Labs. 
He earned his Ph.D. in mechanical engineering from Stanford.
    Welcome, one and all.
    As our witnesses should know, spoken testimony is limited 
to five minutes each, after which the members of the committee 
will have five minutes each to ask questions.
    Before recognizing our first witness, I would like to take 
a moment to explain how our first two witnesses will proceed. 
The report these witnesses are testifying about was a joint 
effort between the Heritage Foundation and the Information 
Technology and Innovation Foundation, which is fabulous because 
they tend to be on opposite sides of the political spectrum. 
They have submitted joint testimony for today but will each be 
given five minutes for oral testimony. So we are just thrilled 
that you are working together.
    And I now recognize Mr. Stepp for five minutes to present 
his testimony.

                TESTIMONY OF MR. MATTHEW STEPP,

                     SENIOR POLICY ANALYST,

        INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION

    Mr. Stepp. Thank you. Chairman Lummis, Ranking Member 
Swalwell, and the Committee, I want to thank you and appreciate 
the opportunity to appear for you--in front of you today. I 
think this is a particularly important topic because Congress 
has an enormous opportunity to turn the national labs into 
engines of innovation and economic growth with minimal budget 
impact.
    My name is Matthew Stepp. I am the Senior Policy Analyst at 
ITIF where I direct its Energy Innovation Program. And from my 
point of view, the national labs are one of the single most 
important public institutions in the Nation's innovation 
enterprise and they can serve as a central tool for boosting 
job growth, creating regional economic development, and 
supporting America's national research goals. So I think just 
like Federal investments in research and development writ 
large, the national labs are fundamentally important to America 
and America's future.
    But, however, the lab system as it is currently managed and 
organized is falling short of its innovation potential and 
ultimately this is why ITIF spearheaded the nonpartisan effort 
along with colleagues from the Heritage Foundation and the 
Center for American Progress to try to find some common ground 
for reform.
    And there are really three principal causes that we focus. 
First is that there is bureaucratic micromanagement at the labs 
that muddles and slows the research process; two, the lab 
research is funded by small technology-centered grants rather 
than funding long-term research outcomes such as those 
developed at the DOE's innovation hubs and ARPA-E; and three, 
the labs' relationship with industry is often weak restricting 
the appreciable economic outcome of the research and limiting 
potential industry partnerships, particularly with small 
businesses.
    And so although my written testimony takes a deeper look at 
over a dozen policies, I just want to highlight three I think 
that are maybe the most important. First, Congress should 
devolve the management of the labs from centralized DOE control 
to a more pure version of the GOCO model where contractor 
accountability is the chief method of oversight. So Congress 
could do this by creating a task force consisting of the labs, 
DOE, industry, and academic stakeholders to target duplicative 
regulations that DOE must eliminate or change.
    So, for example, one area of reform is the size of and the 
extent of the DOE's site offices and the extent that those site 
offices are involved in the day-to-day decision-making labs, 
which is currently dictated from Washington.
    Second, Congress should provide the labs better incentives 
and more flexibility to partner with industry to spur 
technology transfer. And so the current system of agreements is 
complex and oftentimes onerous to navigate, so one way Congress 
can do this is amend the Stevenson-Wydler Innovation Technology 
Act of 1980 to allow the labs to conduct collaborative, non-
national security-related research with third parties without 
DOE sign off. And obviously, this could be implemented on a 
pilot basis at first and it would still require annual review 
and oversight. But I think it would greatly accelerate the 
process of creating industry lab partnerships and accelerate 
the process in moving research from the lab market.
    And third, I think Congress should begin implementing the 
important process of reforming the Department of Energy, as 
Ranking Member Swalwell indicated, and I think the key point 
here is that they should do so around encouraging innovation 
rather than the stovepipe basic versus applied research 
programs or the technology programs that we see today. And 
there is many steps to this.
    I think the first and most important, as was stated, is 
combining the Office of Science and the Office of the Under 
Secretary of Energy into one streamlined Office of Science and 
Technology. This would take--effectively put all non-NNSA labs, 
the 13 of the 17 national labs, under one single leadership, 
which I believe would create better research coordination, more 
productive funding, as well as opportunities for long-term 
planning.
    So in conclusion, I think what is important to state here 
is that as the United States faces new and intense competition 
for global innovation leadership, the labs can certainly serve 
as national--as a national competitive advantage. And it fact, 
they fundamentally must do so if we want to continue to lead 
the world in innovation, but it can only do so if it is 
reformed into a more nimble research system which doing so 
requires starting at the top with changes that don't just 
tinker around the edges and reform the system as a whole.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Stepp follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Lummis. Thank you, Mr. Stepp, for those really 
specific recommendations.
    Mr. Spencer, you will have five minutes.

                 TESTIMONY OF MR. JACK SPENCER,

                    SENIOR RESEARCH FELLOW,

                    THE HERITAGE FOUNDATION

    Mr. Spencer. Thank you, Mrs. Chairman, Ranking Member 
Swalwell, and Members of the Committee.
    The submitted remarks, the report, as you know, is a 
document where we all agree. What I am going to do is move away 
from that just slightly not into areas that we don't agree on 
but rather focus my comments into how these recommendations in 
this report fits into more of a conservative free-market vision 
and why this fits into Heritage's vision of how Federal 
research should move forward.
    My name is Jack Spencer and I am a Research Fellow at the 
Heritage Foundation. The views I express in this testimony are 
my own and should not be construed as representing any official 
position of the Heritage Foundation.
    The work that ultimately became the Reimagining Report 
began some three years ago. At Heritage we were becoming 
concerned that America's government research enterprise was 
getting off track. We felt that it was quickly becoming a 
mechanism to subsidize the private sector, to advanced fleeting 
political agendas, or even sometimes used to pay back special 
interests. So some colleagues and I decided to take a detailed 
look at the Department of Energy spending. We quickly began 
identifying significant problems throughout the budget.
    The problems roughly fell into four categories: too much 
focus on commercialization, too much programmatic duplication, 
too much political influence, and too many subsidies. Simply 
creating a list of programmatic reductions, however, was not 
enough. What we found we needed was real reform, and the 
Reimagining Report puts forth that reform.
    Though reimagining is decidedly nonpartisan and 
unapologetically appeals to stakeholders across the ideological 
spectrum, in developing the court, my objective was to ensure 
that its recommendations were consistent with a conservative 
free-market vision. Ultimately, we determined that many of the 
problems facing the Nation's research establishment emanated 
from an overbearing, Washington-generated bureaucracy that was 
driven more by politics and a desire to control than by 
science, markets, or good governance rate. Thus, we focused on 
recommendations that broadly decentralized authority, realigned 
incentives to be consistent with more desired outcomes, and 
that harnessed the power of markets.
    To achieve this, first, we reorganized the Department of 
Energy research bureaucracy into a single unified Office of 
Science and Technology. This is critical from a conservative 
limited market perspective. Roughly speaking, the bureaucracy 
currently consists of separate entities that conduct basic 
research and those that conduct applied research. The applied 
research generally includes activities that are further along 
the technology development spectrum and are theoretically 
closer to commercialization. This is the type of research that 
the private sector should shoulder from our estimation. By 
removing the bureaucracy created specifically to support those 
activities, we begin to diminish the institutional bias towards 
it. Now, this does not eliminate applied research from the 
Department of Energy. Indeed, those of us who oppose it must 
continue to fight that fight on program-by-program basis.
    Secondly, we drastically reduced Washington micromanagement 
of the labs. Currently, lab managers must follow arcane 
bureaucratic rules that drive up costs, increase bureaucracy, 
and perpetuate general inefficiency. We recommend a 
performance-based contracting system where the contractors are 
free to meet their contractual obligations largely as they see 
fit rather than by prescriptive oversight by the DOE.
    And finally, we free lab management contractors to engage 
with the private sector, universities, or other agencies based 
on market demand and allow them to keep a portion of the 
revenues as part of their management fee.
    The Federal Government today largely pushes research into 
the market. Our approach creates a market incentive for--to 
transfer technology out of the labs. For conservatives, it 
promotes near-term spending cuts by removing the temptation for 
government to use taxpayer funds to fund research facilities 
used by non-federal government entities. We create a system 
where such users pay directly for those services. This 
eliminates any justification for taxpayers to fund it. It also 
sets the stage potentially for shrinking the size of 
government. Ultimately, if a facility attracts no funding, then 
it should be eliminated. If it attracts adequate third-party 
funding, that maybe it should be privatized.
    By implementing these reforms, we believe that we can 
achieve five distinct outcomes. We can rationalize the lab--
rationalize the size of the lab infrastructure; we can better 
focus taxpayer resources on those things that really advance 
the national mission; we can efficiently move--more 
efficiently, I should say, move commercially attractive 
technology into the marketplace; we can yield less government 
waste and more efficient operations; and finally, we can allow 
technology to be pulled by markets, not pushed by government.
    In conclusion, the Nation can benefit from federally funded 
research. We see it every day in the realm of national security 
to give an example. The government gets off track, however, 
when it attempts to directly intervene in the commercial 
sector. Like it or not, the Federal Government is a horrible 
venture capitalist. This is not to suggest, however, that the 
government--that government-funded research cannot lead to 
commercial success. Who doesn't use the internet or GPS? And 
the model for translating government spending into commercial 
success is not to build a program for the purpose of 
commercialization. After all, GPS was not the result of a 
government program to yield some commercial product but rather 
was developed to meet a national security need.
    The key is to develop a system that ensures the taxpayer 
research dollars are focused on meeting the Nation's research 
needs first, then encourage interactions with third parties 
should this research activities yield something that has 
commercial application. Our recommendations do precisely that.
    Thank you for your time today. I look forward to answering 
any questions you may have.
    [The prepared statement of Mr. Spencer follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    [The joint statement of Mr. Stepp and Mr. Spencer follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


(Access the full report at http://www.americanprogress.org/
issues/green/report/2013/06/20/67454/turning-the-page-
reimagining-the-national-labs-in-the-21st-century-innovation-
economy/)
    Chairman Lummis. Thank you, Mr. Spencer. I now recognize 
Dr. Mason for five minutes.

                  TESTIMONY OF DR. THOM MASON,

            DIRECTOR, OAK RIDGE NATIONAL LABORATORY

    Dr. Mason. Chairman Lummis, Ranking Member Swalwell, and 
Members of the Committee, thank you for the opportunity to 
address you today. My name is Thom Mason. I am the Director of 
the Department of Energy's Oak Ridge National Laboratory and I 
also serve as a member of the National Lab Directors' Council.
    The Council is concerned about many of the issues being 
considered at this hearing, so I would like to thank the 
Information Technology and Innovation Foundation, the Center 
for American Progress, and the Heritage Foundation for 
stimulating this broader discussion.
    As context for my remarks, I would like to briefly describe 
Oak Ridge National Lab. As DOE's largest science and energy 
lab, ORNL has an R&D portfolio that spans the range from 
fundamental science to demonstration and deployment of 
breakthrough technologies for clean energy and national 
security. Our mission includes both scientific discovery and 
innovation. So we place a high value on what we call 
translational R&D, coordinating basic research and applied 
technology to solve compelling problems.
    Work with industry is a key part of this process and we 
have several tools for engaging with the private sector: The 
Department's Work for Others program; Cooperative R&D 
Agreements, or CRADAs; and the new Agreements to Commercialize 
Technology, or ACT; as well as user facility agreements that 
provide industry with access to powerful tools for R&D.
    Building and operating user facilities is a signature role 
for the national labs. These facilities and their associated 
research programs add value to the innovation process. For 
example, at ORNL we have combined CRADAs and cost-share 
agreements to work with Caterpillar and Honeywell on a new 
alloy that is now in commercial use. This work has been 
advanced by neutron scattering measurements made at the High 
Flux Isotope Reactor. And we are helping large and small 
companies exploit the world's second-most powerful 
supercomputer to develop new energy technologies.
    Other nations recognize the value of this model. Not long 
ago, the Director of the Institute of Policy and Management of 
the Chinese Academy of Sciences said that China is making 
progress in stimulating industrial innovation and beginning to 
build world-class universities but does not yet have an 
equivalent of the U.S. national labs. However, they are working 
on it. They are planning to move the world's most powerful 
supercomputer--you will note I said we were the second most 
powerful--from Guangzhou to Dongguan where the China Spallation 
Neutron Source is being built, and consideration is being given 
to shifting several major research institutes to an area north 
of Beijing where they can take advantage of a new synchrotron.
    I think this demonstrates that the U.S. model remains 
valid, but nevertheless, we should always be looking for ways 
that we can improve.
    You asked about potential improvements to the DOE, lab 
relationship, management practices, and oversight functions, 
and I believe that the GOCO, the government-owned contractor-
operated lab model, has served the Nation well. Its flexibility 
has allowed the labs to respond to changing national priorities 
and issues. At Oak Ridge we recently used this flexibility to 
right-size our workforce, update employee benefits, and 
streamline our operations. We recognized the budget pressures 
that we all face. We benefited from having the kind of 
relationship with DOE that was specified in the early 
management and operation contracts which called for ``a spirit 
of partnership and friendly cooperation.''
    But as the working group found, the GOCO model can 
certainly be updated and improved. The working group's 
recommendations fall into three categories. With regard to the 
first, transforming lab management, work to build a robust 
Contractor Assurance System has laid a solid foundation for a 
new look at stewardship.
    The second set of recommendations speaks to DOE's 
organizational structure. Secretary Moniz has made a commitment 
to integrate the science and energy missions, and I believe 
that is an excellent move. He clearly understands the need to 
expand the kind of synergistic interaction between basic and 
applied research that already takes place at the laboratory 
level. And by combining at the Under Secretary level the R&D 
programs managed by the Office of Science and the energy 
offices under one Under Secretary, I believe that can be 
further advanced.
    It would also allow for the extension of some of the best 
practices developed by the Office of Science in Laboratory 
Management and strategic planning to the energy programs.
    The last set of recommendations on moving technology to the 
market, I think expanding the ACT mechanism would help the labs 
work with a wider variety of partners. It could provide a 
pathway to flexible pricing for proprietary R&D, which was 
another recommendation. And for labs whose R&D portfolios 
intersect the commercial world--which is not all of them, I 
might point out--adding weight to tech transfer in our 
performance plans would increase emphasis on this activity, 
particularly if we also gain flexibility in establishing and 
executing partnerships.
    New metrics should address multiple aspects of industry 
engagement, not just licensing deals and revenue, however. And 
these metrics will need to take into account the high failure 
rate for all new technology ventures. It would also be helpful 
if our laboratory-directed R&D funds could be used to support 
tech maturation.
    In closing, the working group's goal of ensuring that 
national labs remain effective and continue to deliver national 
benefits to the taxpayers is one we all share. I look forward 
to participating in a broad discussion of how we can best 
obtain it.
    Thank you again for this opportunity to testify.
    [The prepared statement of Dr. Mason follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Lummis. Thank you, Dr. Mason. And now, we will 
wrap up with Dr. Arvizu. You are recognized for five minutes.

             TESTIMONY OF DR. DAN ARVIZU, DIRECTOR,

              NATIONAL RENEWABLE ENERGY LABORATORY

    Dr. Arvizu. Thank you, Madam Chair.
    Ranking Member Swalwell and Members of the Committee, thank 
you for this opportunity to discuss the importance of the 
Department of Energy's national labs and the recent Reimagining 
National Labs Report.
    I am Dan Arvizu, Director of the National Renewable Energy 
Laboratory in Golden, Colorado. I have been associated with 
Federal research in the national laboratory system throughout 
my mostly four decades' professional career. I started with 
Bell Labs. I worked 20 years at Sandia National Laboratories, 
and I have been at NREL for the past 8 1/2 years. I have also 
spent time in the private sector. I am currently Chairman of 
the National Science Board as well.
    I am pleased that the Reimagining National Labs Report is 
drawing attention to this critically important item of high-
impact research that can't or won't be supported solely by the 
private sector. The report certainly does make a number of 
sound and valuable recommendations, which is all the more 
impressive given the distinct ideology and political 
differences between the three organizations that sponsored it.
    At the same time, the report readily concedes that the 
three sponsors did not achieve agreement on the three 
fundamental issues of the questions of funding levels, funding 
priorities, and the role of government. So while the report 
does offer a number of beneficial recommendations and I am very 
pleased to discuss those, we should not lose sight of the fact 
that we simply will not be able to optimize the impact of the 
national laboratories without also addressing these key 
questions of funding, priority and roles.
    We shouldn't also overlook the fact that the overarching 
missions of the national laboratories are a key strength of the 
entire complex. The four DOE missions--national security, 
science, energy, environmental management--remain as vital and 
relevant to our Nation today as they ever have in our history. 
I strongly believe that these missions should continue to be 
the driving force in the continuing oversight and management of 
our laboratories and an essential element in any management 
reform efforts as well.
    National security, science, energy, and environmental 
management have determined the core competencies and defined 
the key capabilities for the complex as a whole and each 
laboratory individually. And these long-identified and well-
understood missions ideally should be the prism through which 
Congress, the Department of Energy, and the labs themselves 
make decisions on moving forward.
    Let me take a moment to explain why the national labs, as 
unique national assets, should be nurtured with robust and 
continued investment. First, DOE laboratories are addressing 
critical national security, energy technology, and fundamental 
science. They conduct the world's leading scientific research; 
ensure that America will have an abundant, affordable, clean 
and reliable energy future; and protect the Nation by keeping 
our nuclear deterrent reliable and safe.
    Our national labs are the homes of scientific and 
engineering capabilities that are the engines of innovation and 
allow us to compete in a rapidly evolving global economy. These 
capabilities tackle our long-term problems but also our near-
term emergencies such as the labs' responses to events like the 
Gulf oil spill and the 9/11 attacks, and Hurricane Katrina, and 
Super Storm Sandy.
    Our national labs design, build, and operate unique 
scientific instrumentation and steward research and user 
facilities serving tens of thousands of scientists and 
engineers from both the private sector and academia.
    With respect to the report conclusions, I would strongly 
agree that there is no bright line between basic and applied 
research. If you want to be market-relevant, you can't separate 
the crucial role played by applied research working in concert 
with more fundamental research, as is frequently practiced 
within our national laboratories.
    Additionally, to further grow U.S. competitiveness, I can 
clearly report that we should accelerate commercialization by 
putting more emphasis on tech transfer in the context of the 
mission objectives.
    One of the principal conclusions of the report is that the 
historical model of organizing and managing national labs as 
government-owned, contractor-operated facilities is 
fundamentally sound, but has eroded over time. I agree. The 
Department and the lab complex should work together to 
recapture the best elements of the original GOCO model, with 
the Department giving laboratories direction on what needs to 
be done and the laboratories being able to decide how to do it. 
I am pleased to say Secretary Moniz is working to that end. 
Additional flexibility and accountability are key to achieving 
that objective.
    Finally, the inconsistency of funding different labs, 
different lab functions, and maintaining lab infrastructure is 
a systemic problem that must be addressed. Apart from 
designated user facilities, the reality is that labs don't 
often receive the funding they need to adequately steward the 
national capabilities on their campuses. This results in 
inconsistent performance across the complex and it means that 
industry and universities face obstacles and considerably 
higher costs in partnering with laboratories.
    In conclusion, I applaud the authors of the report for 
underscoring a very important question, and that is how can we 
best martial our national research resources to surmount the 
critical challenges of our time and the uncertain challenges of 
our future.
    Thank you for your attention. I look forward to answering 
any of your questions.
    [The prepared statement of Dr. Arvizu follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Lummis. Thank you, Dr. Arvizu. And thank all of 
you for being available for questioning today.
    I am reminding Members that the Committee rules limit 
questions to five minutes. The Chair will, after one other 
housekeeping matter, start the opening round of questions.
    I do, before we begin that, ask unanimous consent to enter 
into the record a letter from Secretary of Energy Ernest Moniz 
responding to a letter Ranking Member Swalwell and I sent him 
in late June of this year regarding the national labs. And I 
say that because it has only been two weeks since we sent him 
the letter and we have already gotten a response. So we are off 
to a great start in terms of our working relationship with the 
Secretary and I want to compliment him on his prompt response. 
Without----
    Mr. Swalwell. Still hopeful he will take us up on our offer 
to visit Wyoming and California.
    Chairman Lummis. Indeed. And we are really looking forward 
to a positive working relationship with the Secretary.
    So without objection, so ordered.
    [The information appears in Appendix II]
    Chairman Lummis. And without further ado, the Chair 
recognizes herself for five minutes in this first round of 
questioning.
    The Reimagining National Labs Report is primarily focused 
on the structure of the 16 government-owned, contractor-
operated labs. However, there is this unique critter in the DOE 
lab system. It is a government-owned, government-operated lab, 
the National Energy Technology Lab, which conducts fossil fuel 
R&D. I would like to ask each of you is there any reason that 
the fossil fuel lab should not also be contractor-operated 
empowering it to take advantage of the operational efficiencies 
and flexibilities associated with private management and the 
report's recommendations? When any of you like to respond to 
that question?
    Mr. Stepp, thank you.
    Mr. Stepp. I will just jump in and say there is no 
management operation or scientific reason why it shouldn't be 
contractor-operated. I think maybe the lab directors can 
provide more of a history and why NETL was--remains a GOGO, but 
I think the recommendations we outlined in the report are fully 
applicable to NETL moving forward in addition to making it a 
contractor model rather than a government operation model.
    Chairman Lummis. Mr. Spencer?
    Mr. Spencer. Yes, I would certainly agree with that. If you 
look at what NETL does, where its funding comes from, its 
missions, to me it is unclear why the government is involved in 
any of those things at all for the conventional fuels industry. 
So at a minimum I think it is appropriate to make it a GOCO, 
and one may make a strong argument for going even beyond that.
    Chairman Lummis. Dr. Mason?
    Dr. Mason. I could maybe offer a bit of a historical 
perspective on that distinction because it does stand out as a 
bit of an anomaly. It has its origins in the way that DOE was 
created in the '70s in response to the Arab oil embargo when 
the Atomic Energy Commission was broken apart into a regulatory 
component, the NRC, and something that became the Energy 
Research and Development Agency and ultimately DOE that 
incorporated elements from other government agencies like 
Interior.
    And NETL came from that side of the equation, the Interior 
side of the equation, so it had been operated as a government-
operated entity whereas the Atomic Energy Commission had the 
GOCO tradition going back to the Manhattan Project. And I think 
the reason it persists is because of the difficulty of the 
transition, and that is really the challenge. It would be 
complicated to do and, you know, there are lots of stakeholders 
involved, and sometimes these things are hard to get to.
    Chairman Lummis. Dr. Arvizu?
    Dr. Arvizu. Yes. And that, by the way, would be a great 
question to ask Secretary Moniz.
    Chairman Lummis. Okay.
    Dr. Arvizu. I think he clearly has some history with this 
and I believe there has been evaluation of making that 
conversion in previous times. And I think it would have to be 
carefully considered based on mission objectives and things 
that are part of that. But I agree with what my colleagues have 
said.
    Chairman Lummis. Thank you. While you have the microphone, 
Dr. Arvizu and Dr. Mason, about how many of the WFO, CRADA, and 
ACT agreements are your labs partner to would you guess?
    Dr. Arvizu. Total number of agreements?
    Chairman Lummis. The agreements for commercializing 
technology, how many of those have you used roughly? I mean 
very roughly.
    Dr. Arvizu. Yes. I will give you a crisp answer, we have 
over 130 active Cooperative Research and Development 
Agreements. We have a total of 400 and change number of 
agreements that relate to Work for Others, Technical Services 
Agreements, and other forms of relationships that we have with 
industry. It is part of our mission to work with industry. And 
as a consequence, I think we probably have the lion's share of 
those relative to other national labs.
    Chairman Lummis. Okay. Dr. Mason?
    Dr. Mason. I don't have the exact numbers but I do know 
that we interact with close to 1,000 companies through a 
variety of different mechanisms like the CRADAs, Work for 
Others, and user agreements. ACT is a new mechanism. We 
received approval to participate in the pilot for that earlier 
this year, and so we are just in the process of negotiating the 
first ACT agreements.
    Actually, interestingly, one of the first ones may be with 
our state government who found that the flexibilities embedded 
were equally important to them although it was originally 
imagined that it would be most valuable for industry.
    Chairman Lummis. Thank you, Mr. Mason.
    I now recognize Mr. Swalwell for five minutes.
    Mr. Swalwell. Thank you, Chairman Lummis.
    And I wanted to first start with Dr. Mason, and I 
appreciate you appearing today as the minority witness.
    I want to take a minute to touch on a critical part of the 
laboratory workforce that may often be overlooked, and that is 
the construction and maintenance workers. And it is essential 
to have dedicated, trained maintenance workers who understand 
the challenges of a day-to-day work that is conducted at our 
national laboratories. And my question for you, Dr. Mason, is 
what you can tell me about what we can do to ensure that we are 
protecting these valuable employees and ensure that they are 
paid a prevailing wage and that laboratories are not going 
around Davis-Bacon requirements or using temporary workers to 
not have to comply with prevailing wage laws?
    Dr. Mason. Well, you know, first, any construction project 
that we undertake is subject to Davis-Bacon, and so we go 
through the Davis-Bacon determination to determine what is 
covered work and then the covered work is subject to the 
prevailing wage requirement. So that is built into how we do 
construction projects.
    In terms of the ongoing maintenance, which is not Davis-
Bacon, I can speak to Oak Ridge. Maybe my colleague can speak 
to how things are at NREL. But about 15 percent of our 
workforce is the crafts, and they are represented by the Atomic 
Trades and Labor Council. We have a collective bargaining 
agreement with them. And in fact the wages that we pay are in 
fact probably slightly above the prevailing wage level that 
would apply if it were Davis-Bacon work, as in the case of a 
construction project.
    And you are absolutely right. Every element of our 
workforce is critical to getting the job done. And I would note 
that, as I mentioned, in preparing to deal with budget 
constraints, we have been looking hard at our wages and our 
benefits, and in fact as all of the labs went through this 
period with the pay freeze that has been experienced in the 
Federal system, of course that did not apply to collective 
bargaining agreements but we were able to reach agreement with 
the ATLC where they undertook exactly the same austerity 
measures that applied to all of the other staff because of the 
recognition that it was important to protect jobs.
    So I think we have a very strong relationship and all our 
employees are paid at rates that are market-competitive. That 
is actually one of the benefits of the GOCO model.
    Mr. Swalwell. Great. Thank you, Dr. Mason.
    Also, for Dr. Arvizu, how are the national laboratories 
working with private industry? And what I mean is can you 
describe the process for a private company to begin working in 
an unclassified way with a national laboratory and what can we 
do to expedite this process to increase the technology 
transfer?
    Dr. Arvizu. So there are a number of mechanisms that we use 
and Dr. Mason has mentioned a few of those. The one that we use 
mostly is the Technical Services Agreement because they are 
very, very quick and they allow us to essentially put 
agreements in place in less than two weeks and essentially that 
is what we do.
    They are--those are agreements that don't have intellectual 
property sorts of expectations and so that doesn't need to be 
negotiated necessarily.
    The workhorse of our agreements though is the Cooperative 
Research and Development Agreement, and we have a number of 
those. The way industry comes in is they can come in under a 
number of different pathways. They can cost-share research with 
us. They can do a total funds and research opportunity. They 
can be part of a DOE solicitation program that ultimately ends 
up in a cooperative agreement. But we have standard agreements 
that can be executed very quickly. We have others that if there 
needs to be tailored negotiation terms, it takes a bit longer. 
So it is in that method of trying to get to the most flexible 
items possible that there is opportunity for improvement.
    Mr. Swalwell. Great.
    Dr. Arvizu. And so the ACT is one of those.
    Mr. Swalwell. Thank you, Dr. Arvizu.
    And, quickly, Mr. Stepp, one of the recommendations is that 
Congress allow the labs to charge a market rate, which I think 
is an interesting idea, but I am concerned that this could 
crowd out smaller, more innovative ideas that don't necessarily 
have funding behind them, users that don't have the funding 
behind them. And do you fear that unintended consequence or 
intended consequence? I hope not but----
    Mr. Stepp. No, I don't think that is an unintended 
consequence. No, I don't necessarily fear. I think there is a 
concern--a larger concern that, say, smaller businesses are 
currently unable to work with the labs in a large way, and so I 
think what the--charging a market rate allows is actually 
provides an incentive for the labs to do more of this type of 
collaborative work with industry so they will have more of an 
opportunity to work with those smaller entities. I think there 
are other recommendations in the report and elsewhere that 
would actually help smaller entities work with the labs. I 
think that is not a one-size-fits-all. I think that--adding 
that market incentive broadens the ability of the labs to work 
with them, but there has to be complementary policies that go 
along with it to help the smaller entities.
    Mr. Swalwell. Great. Thank you, Chairman Lummis.
    Chairman Lummis. I thank the Ranking Member and now yield 
to the gentleman from Illinois, who is always at these 
hearings. We so appreciate your valuable attendance. The Chair 
now recognizes Mr. Hultgren.
    Mr. Hultgren. Thank you, Madam Chair. Appreciate all you do 
as well. Thank you for doing this. Thank you all for being 
here. I do think this is a really important discussion and 
appreciate each of you, the work that you have done in 
different areas, specifically in the labs or even just helping 
us figure out the future of our laboratory system.
    I love serving on the Science Committee. I am very proud of 
the new bipartisan National Science and Laboratories Caucus 
that is growing and active. I absolutely believe in our 
laboratories and am so proud of what is happening in our 
laboratories and I know what is going to happen in our 
laboratories.
    So I think this is a very important discussion to be having 
of what does the future look like? And I agree with many of the 
conclusions that were set out in the study and--of giving some 
more flexibility, getting less micromanagement from top-down, 
making sure that we are protecting from pushing agendas through 
our labs but instead allowing labs to do research.
    For me, it really goes back to a core fundamental belief 
that I have as a conservative is that government has to do what 
the private sector can't do, and whatever the private sector 
can do, we shouldn't do. And whenever--you know, there are 
balances there. Certainly, when it is technology transfer, that 
is where we struggle and figure out what is that line that we 
should do and the labs should do and what should private sector 
do.
    I don't think there is any question or not much question at 
least when it gets to basic scientific research. That is very 
difficult if not impossible to put together a business plan to 
sell to shareholders to do basic scientific research. And that 
is something we have to do. So one of my frustrations and I 
guess a challenge I would make as a follow-up to the study or 
kind of next steps of the study is really recognizing--I think 
we have wonderful lab system but also very diverse. You 
mentioned it a little bit in the study but I think we have to 
recognize that there are some labs that aren't positioned to 
provide tech transfer. There are some labs that absolutely are 
and should be kind of on the forefront of making the connection 
with private sector. There are others who are doing the work 
that our private sector can't do. And we need to keep doing 
that.
    So that is something I want to ask you about specifically 
with laboratories. I am passionate about Fermilab that is in my 
district. I am open about that, but other laboratories as well. 
You know, I know Princeton Physics Lab, Thomas Jefferson 
National Accelerator Lab, these other laboratories also have a 
very specific mission that doesn't necessarily lend itself to 
tech transfer but does absolutely have a vital role of basic 
scientific research.
    So just want to get your response on that of how you see 
that fitting of those very focused mission labs. How does that 
interact with your report, specifically Mr. Spencer and Mr. 
Stepp?
    Mr. Stepp. I will start with that. I think that is a really 
great question. It is a key issue. It is one that we were very 
careful to address in the report. In fact, we didn't propose 
any reforms that were kind of a blanket approach, a one-size-
fits-all. For--I will give you an example. We want to make 
technology transfer a bigger part of the annual evaluations of 
the labs but we were careful not to specifically say what the 
weights and how specifically that should be done because we 
recognize each of the labs are different.
    So in fact we really hoped that DOE and individual labs 
would negotiate what those weights and so forth would be 
recognizing that labs like Fermi are going to do less 
technology transfer just inherent to the science than say an 
NREL would actually do. So I think that is a key question. I 
think that is built into some of the recommendations I would 
make.
    Mr. Spencer. Yes, that is a great question, and it is a 
concern that has been brought up by a number of folks. There is 
nothing in the report that prohibits funding for discrete 
projects. So the way we would look at this is we are going to 
continue to debate amongst us all what the--what should be 
funded through the labs, what we decide are core government 
missions. And these are the types of things that you are 
talking about. So there is nothing in the report that prohibits 
any of that or increases it.
    What we are talking about is once we have a debate and you 
have that funding in place, there is other stuff. What are the 
mechanisms to better rationalize the lab infrastructure that is 
left over? What are the mechanisms that we can put in place 
that even on the basic science piece that we can help identify 
earlier on what might be market--interesting in the 
marketplace. So that is really where our recommendations focus 
on, not on that core function. So all of those things that you 
are talking about will still be there, assuming you win the 
debates and the--you know, during the funding process.
    Mr. Hultgren. Yes. Well, that is the challenge and I want 
to be engaged in it. You know that. The people on the committee 
know this that this is important. And I will close with this--
and you all know this as well. But one of my physicists, a lot 
of my constituents are much smarter than I am, which I am 
thankful for, but especially my physicist constituents. But one 
of them said something that there is really two kinds of 
science: Newtonian science and Edisonian science. The market is 
excellent at the Edisonian science of taking great ideas, new 
discoveries, and applying them to make our lives better and 
make a profit, a good thing for everybody. Newtonian science, 
the basic fundamentals of what makes something work, the market 
has a trouble doing that type of research.
    And so I just want to make sure as we are going through 
this--and again, I will spend some more time going through the 
research and would love to sit down with you more directly on 
this and maybe even have something with the caucus or follow up 
with the Committee to talk further on that, but just to make 
sure again that if all else fails we are still doing the 
Newtonian science, the new discovery, the things that are going 
to inspire young people to want to join in and study STEM 
education.
    And I think that is going to be a really important thing 
that I would also--and I am sorry I am going over, but real 
quickly, that STEM education is so important and our labs are a 
key part of STEM education. We need to be talking about that. 
Kids are smart in the 7th and 8th grade. They are going to see 
if we don't believe in science as a country, they are going to 
choose to go into law or finance or something else. We need to 
make sure that they see that there is an opportunity for them 
to do research and discovery right here in America and our labs 
are an important part for that to happen.
    So thank you. Thank you for your generosity and time, and I 
yield back.
    Chairman Lummis. The Chair just isn't going to interrupt 
that kind of passion and enthusiasm. Thank you very much, Mr. 
Hultgren.
    The Chair now recognizes the gentlewoman from California, 
Ms. Lofgren.
    Ms. Lofgren. Well, thank you very much.
    And it was wonderful to hear Mr. Hultgren's comments and it 
reminds me of the long-standing bipartisan support we have in 
the Congress for basic research. It is good that we reiterate 
that because, you know, we have had little dustups on other 
things, but if we continue to have that solid support across 
the political spectrum, I think our country's future will be 
much brighter and it was good to hear a reaffirmation of that.
    I wanted to talk a little bit about--I realize that the 
focus really has been on Office of Science research, but 
looking at the report on page 40 and 41 on the NNSA, it seems 
to me--I mean over the years I have heard some concern 
expressed on Office of Science management, and I am sure that 
there can be improvements made. But it pales compared to the 
criticism I have heard from--about NNSA management.
    And as you point out on page 41 NNSA does have a national 
weapons focus, but they also fund science. And I think if we do 
not focus on the outrageous mismanagement at NNSA with the--
most of the money is there, and tie in the reform effort 
because they have a huge role to play in science, as well as 
weapons security that we are going to miss a big bet.
    Now, I realize Armed Services also has--Committee has some 
jurisdiction but we do, too, in terms of the science issue. And 
I am wondering, Mr. Stepp and Mr. Spencer, I realize that 
wasn't the focus of the report, but if you think that some of 
the recommendations made--well, I will just give you an 
example.
    NNSA headquarters made a budget finding about Lawrence 
Livermore National Lab in terms of what they could yield on 
user fees that was completely made up. They never consulted 
with the lab. They never investigated whether there were any 
customers other than Russia or China, which for security 
reasons would be problematic, and they just put a number in 
there, which since it is--cannot be done, will result in the 
layoffs of hundreds of physicists at the lab, which will 
critically impact our ability to even run the Stockpile 
Stewardship Program. Do you have a comment on that?
    Mr. Stepp. Sure, this received significant debate over the 
year-and-a-half we spent doing this project, and I will give 
you my personal opinion. There is not one recommendation in the 
report that I think shouldn't be applied to the NNSA labs. I 
think ultimately we decided that because Congress is taking a 
very unique and special look at NNSA and there is now a task 
force that came out of NDAA and what they are going to propose, 
that given all those complexities, we didn't want to get these 
recommendations wrapped up in those things, but we do make the 
comment in the report that ultimately spurring more technology 
transfer, more efficient management, all of those principles 
should be taken at NNSA and ultimately whether or not Congress 
decides to reform the NNSA management structure, give it back 
to DOE, do whatever it is, I think those principles hold for 
whatever the new structure is going to be.
    And ultimately, my personal view is that at the end of the 
day all of the labs would be under unified leadership and we 
wouldn't have to split non-NNSA and NNSA labs up as we 
proposed. But I think we are happy to at least get 13 of the 
labs under one unified leadership----
    Ms. Lofgren. No, I understand.
    Mr. Stepp. Right.
    Ms. Lofgren. Are there other witnesses who want to comment 
on that?
    Dr. Mason. Well, certainly, you know, the NNSA labs do 
contribute a lot to both the science and the energy missions, 
and similarly, actually, you know, at my lab we do a lot of 
work in support of nonproliferation programs for NNSA. And in 
fact there is a very healthy interaction between some of the 
technologies developed.
    Dr. Mason. And so as Mr. Stepp said, although in areas of 
national security, there are some things that you stay away 
from tech transfer because----
    Ms. Lofgren. Sure.
    Dr. Mason. --you know, we call that espionage. There are a 
lot of innovations that have flowed out of the national 
security missions, just as was the case with GPS.
    Dr. Arvizu. And if I could add to that, having spent 20 
years in a national security laboratory, there is great synergy 
between what the NNSA labs and the bulk of the national labs 
do. The value and strength of the national labs is in their 
cohesive interaction and we do a lot of work with Sandia as a 
consequence of that.
    Ms. Lofgren. Madam Chairman, I think this is such an 
important issue in its joint jurisdiction between our committee 
and Armed Services, and maybe we could discuss doing something 
with Armed Services to take a look at this because I think if 
we don't, the science mission gets lost in the shuffle and that 
would really impair our Nation's future. So I thank you for 
allowing me to ask these questions.
    Chairman Lummis. I thank the gentlelady. The Chair now 
recognizes the gentleman from Illinois, Mr. Lipinski.
    Mr. Lipinski. Thank you. I would like to start off by 
commending the authors for all the great work that went into 
preparing this report. The fact that the report is co-authored, 
as the Chairwoman said, is co-authored by experts from think 
tanks across the ideological spectrum as well as the ITIF is 
really a testament to the wide appeal that I think a lot of 
these recommendations are going to have, and I certainly think 
there are a lot of very appealing recommendations in there.
    I am especially interested in the recommendations regarding 
technology transfer at the labs. I have long been a proponent 
of facilitating technology transfer from all federally funded 
scientific research which goes on at research universities and 
also the DOE national labs because they are a very important 
part of that. And I think we have in the past overlooked that. 
I think our labs do a wonderful job and I am not just saying 
that because Argonne National Lab is in my district, but we 
should always look for ways to make their work on technology 
transfer easier.
    As I said, when the report came out, I intend to work with 
the authors to implement some of the recommendations in the 
report.
    I want to start out and ask--talk about the ACT agreements. 
I know there has been some talk about that already, but I know 
that these agreements are intended to provide a flexible 
framework for negotiations of intellectual property rights to 
facilitate the technology transfer moving from the lab to the 
marketplace. Right now, it is a pilot program established last 
year by DOE and I understand only a few labs are able to enter 
into ACT agreements at present. So I wanted to hear from the 
panel both from Mr. Stepp and Mr. Spencer, also from the 
national lab perspective, from Dr. Mason and Arvizu, do you 
think that the ACT agreements could be utilized by all DOE labs 
through--to facilitate technology transfer? Let's start with 
Mr. Stepp.
    Mr. Stepp. Absolutely, yes. I think ultimately as a group 
when we were discussing what our ideal collaborative agreement 
will look like, ACT comes relatively close in terms of its 
flexibility, so I see no reason why all the labs can't use it.
    Mr. Spencer. Yes, I would just add to that that as that 
expands, however, we need to make sure we put a premium on 
transparency. That is going to be really important if what we 
recommend is implemented and we give a lot of flexibility to 
how these interactions take place. It is going to be really 
important that we are able to see from an oversight perspective 
exactly what is going on there, so we need to make sure we 
couple the additional flexibility with maximum transparency.
    Mr. Lipinski. Thank you. Dr. Mason?
    Dr. Mason. As you know, ACT is currently a pilot and that 
is partly because it is a new thing, and I think there are some 
labs who elected not to participate in the pilot not because it 
would be impossible for them to implement but just simply 
because they wanted to wait and see how it worked out. So my 
expectation is that if the initial feedback is positive in 
terms of fundamentally faster time to agreement, and that is 
really what ACT is about, then that will encourage some of the 
labs who haven't participated in the pilot to join in.
    You know, in the end, the way that ACT works is it allows 
the contractor who operates the lab to serve as a buffer 
essentially between what looks like a more normal business-to-
business agreement and the requirements of dealing with the 
Federal Government. And so the contractor managing the lab has 
to be willing to serve as that buffer. That involves 
shouldering some risk and so I think that is why in some cases 
some of the labs have chosen to sort of wait and watch and see 
how the pilot goes.
    Dr. Arvizu. And I agree certainly with what has been said. 
In addition, I think it is another tool in the toolbox. I think 
the more tools we have, the flexibility we have, the better it 
is. Even in the pilot there are some provisions that probably 
need to be revisited, one of which is that we cannot do an ACT 
agreement with an entity that is receiving government funding. 
And so we need to do something to relieve that constraint 
because that really eliminates a great deal of companies, Small 
businesses that have an SBIR (Small Business Innovation 
Research) report--have an SBIR grant, for instance, cannot 
participate in the ACT. It eliminates that as a particular tool 
for that group of companies and entities.
    So there are ways to improve it but overall I think there 
is no reason why this can be expanded to all the national labs.
    Mr. Lipinski. Thank you. Mr. Spencer?
    Mr. Spencer. It is worth mentioning that we addressed some 
of those--that thing specifically in the report, and it is 
also--I would like to just throw out there that, you know, we 
think it is really important to introduce that those market as 
well in terms of fee bonuses and setting prices and that sort 
of thing to help facilitate these sorts of interactions.
    Mr. Lipinski. Thank you. I would just throw out and put in 
a question for the record asking about increasing the 
importance of the weights put on technology transfer in the 
report cards for DOE labs. But I know my time is expired, so I 
yield back.
    Chairman Lummis. Thank you, Mr. Lipinski. We do have time 
for a lightning round, and since there is interest among 
members of the committee, we will do that now. Each Member will 
have three minutes, so if the clerks will set the clocks for 
three minutes, I will begin.
    And in my first question is a segue from Mr. Lipinski's 
questions. Can you tell us how the ACT model is--gives you more 
flexibility or is a little different from CRADAs and other 
models that you have used in the past?
    Dr. Mason. In a Work for Others agreement, which ACT is 
fundamentally an alternative to, there are a number of 
provisions that are required because even though the labs are 
operated by contractors, they are government labs. And so one, 
for example, is that essentially the government always has to 
be in a zero-risk position financially so that if there was a 
cost overrun on a privately funded project and you did not have 
funds in hand to cover it, that would be an anti-deficiency, 
which is obviously not a good thing. Someone can go to jail and 
so forth. So we require payments in advance, 90-day payments in 
advance. We cannot provide any performance guarantees.
    So the contract that we would propose to a private sector 
entity is: pay us in advance, we will do the best we can, and 
if we can't get it done, you are out of luck. It doesn't 
resemble what looks like a normal business contract where you 
might guarantee a price and a deliverable. ACT allows us to 
sign that kind of contract because the contractor will shoulder 
that risk. So the government is still protected. There will be 
no anti-deficiency. If it takes longer, if it costs more, the 
contractor will shoulder that burden.
    In return, the contractor is allowed to charge an increment 
on the cost of the work to cover that risk, and that gets to 
the incentive that Mr. Spencer recognized. So the contractor 
will have an incentive to go into those sorts of contracts but 
the government will always be held harmless. The hope is that 
allows us to reach agreement quicker because private sector 
companies will look at a contract that looks like it has a 
deliverable, it has a price, and then we have more flexibility 
in IP as well.
    Chairman Lummis. They just called votes in a complete 
surprise to us. So I am going to give it--but we do have time 
for each Member to ask one question. So I will yield the 
questioning to Mr. Swalwell.
    Mr. Swalwell. Great. Thank you, Chairman Lummis.
    Dr. Mason, other government agencies, universities, 
industrial laboratories are regulated under OSHA as far as 
workplace health and safety conditions, and DOE is unique and 
maintaining its own environmental safety and health 
infrastructure for its national laboratories. Do you believe 
that the safety and productivity of DOE's national laboratories 
may be better served by shifting and moving the labs to OSHA 
regulation rather than regulation by the Department itself, and 
if so, why?
    Dr. Mason. This is actually a topic that the National Lab 
Directors Council has looked at in the past, and we have 
recommended that this should be something the Department 
seriously consider because we do believe there is an 
opportunity for cost savings. And I think that the thing that 
one needs to be very clear on is we are absolutely committed to 
world-class safety performance in our institutions. So we are 
not talking about backing away from safety or watering down 
requirements. It is really a question of what is the most cost-
effective way to achieve that safe workplace.
    And, you know, if you look at many of the safest places to 
work in America today, our top-performing companies that are 
regulated by OSHA, I believe there is no reason that we can't 
achieve that same thing just as we do now in the current self-
regulated environment that DOE operates.
    Mr. Swalwell. Great. Thank you, Dr. Mason. Thank you.
    Dr. Arvizu. May I ask at a little preamble to that or 
postamble to that, we have looked at that problem before is 
that OSHA will not take on that responsibility without the 
facilities of the DOE being in compliance with their 
requirements. And when it was examined last time, it was over 
$100 million of investments required in order to get into 
compliance so that could actually happen. So we need to be 
cognizant of the fact that that is a barrier to actually 
implementing that particular type of a structure, which I agree 
with. It is just hard to do unless we have the infrastructure 
investments required to bring our facilities up to compliance 
conditions.
    Mr. Swalwell. Thank you.
    Chairman Lummis. Thank you. And Mr. Hultgren?
    Mr. Hultgren. Thank you. Real quickly, I know Secretary 
Moniz had sent a letter to the Chairman and Ranking Member and 
in the letter had referenced the national laboratory directors 
identifying 20 specific areas for improvement. Department--it 
went on to say that the Department had taken action on 14 of 
those, action still pending on two, agreement to defer for four 
remaining items. I wonder if you could talk briefly about that 
or if you could kind of get us some information specifically on 
those 20 areas. I know I haven't seen those. I am not sure if 
other Members have seen those. So I wonder if you can comment 
on that and maybe also follow-up in writing for us of some 
specific areas of improvement that have been identified by lab 
directors.
    Dr. Mason. Yes, we will be happy to provide that 
information.
    Just a very quick comment, this came out of an exercise 
that we called the Burdensome Policies White Paper that we did 
a couple years ago at the request of Secretary Chu. I think he 
was a little bit tired of lab directors coming in and 
complaining that it was too hard and too expensive to get our 
jobs done. And he said, ``I need specifics. I need specific 
examples of things that I can work on.'' And so, as a group, we 
collected ideas and synthesized them into this burdensome 
policies document, which we will share with the Committee. And 
DOE has begun working on those and in fact--you know, not in 
the government transformation or changing things, but many of 
the reasons that we feel frustrated in terms of effectiveness 
and cost are not because of big things. It is a layering over 
decades of a whole bunch of small things and we have got to 
work them away. So we will provide that to you.
    Mr. Hultgren. Thank you. I yield back.
    Chairman Lummis. I think the idea of a burdensome practices 
memo would be good for our leadership as well. I--Mr. Lipinski.
    Mr. Lipinski. Thank you. I will get back to what I had--was 
talking about at the end of my first round there. I will just 
briefly say right now technology transfer activities usually 
account for about--for less than five percent of the overall 
grade for a lab on report card, and--but the report advocates 
raising the priority of technology transfers to the same level 
of importance as other items like business systems and 
laboratory leadership. So I just wanted to ask Dr. Arvizu and 
Dr. Mason about the report's recommendations about raising the 
weight that technology transfer is given on these lab report 
cards, what your thoughts are on that. Dr. Arvizu?
    Dr. Arvizu. Yes, so the first thing I would say is that not 
all labs are the same and Dr. Mason can talk about the Office 
of Science labs. Certainly in the case of NREL, we have had as 
a--essentially one of the major elements of our Performance 
Evaluation Management Plan a topic called Accelerating 
Commercialization and Increasing Deployment. So it started off 
three years ago. It was 25 percent of our grade. Last year, it 
was ten percent of our grade. This year, it is 15 percent of 
our grade, so it is kind of moving around a little bit, but 
there is actually a line that does that. I think it really 
depends on the mission of the specific grading entity. In our 
case it is EERE. This is what they care about and it is part of 
our grade, but it is not true and uniform across the other 
labs.
    Dr. Mason. Yes, I think it does--and I think it is noted in 
the report--need to be varied depending on the nature of the 
mission and the lab, but I think overall the reality is that if 
you place a high priority on something, that is what will 
happen. And in many cases I think there would be an advantage 
to elevating the priority.
    Recognizing that it is not just about licensing agreement, 
there are many different ways we can interact with industry 
through our user facilities and even in the fundamental science 
labs like Fermilab, you know, picking up on the remarks from 
Representative Hultgren. You know, there are things that 
Fermilab has done to support the development of proton therapy 
for cancer therapy that have a tremendous impact, it may not 
take the form of a licensing agreement with industry but there 
are now proton therapy centers being built around the country 
modeled on Loma Linda. There was a key role that Fermilab 
played in putting it together.
    So there are many different ways to measure it, but I think 
if you do elevate the priority, it will get more focus at the 
labs.
    Mr. Lipinski. Thank you. And I want to thank the Chair for 
holding this hearing. I think it is very important that we look 
at this report and follow up also on some of the 
recommendations. So thank you.
    Chairman Lummis. I thank every member of this committee and 
our staff. I thank our witnesses.
    It is really encouraging that the same week of Secretary 
Moniz's announcement the think tanks released a report entitled 
``Turning the Page: Reimagining the National Labs in the 21st 
Century Innovation Economy,'' particularly encouraging because 
you put out a 70-page detailed report. It is a reminder that we 
can do things on a bipartisan basis where we see opportunities 
for policy improvement. The report included a bevy of bold 
recommendations including enhanced technology transfer, 
reducing micromanagement and bureaucracy, changing the DOE 
organizational structure and fundamental relationships with the 
national labs. Since collectively they manage more than $10 
billion worth of scientific and national security, it is 
important that we give thoughtful consideration to these 
issues.
    We recognize that the labs sponsor cutting-edge basic 
research and manage world-class user facilities. And it is a 
driving force behind the U.S. global scientific leadership and 
economic competitiveness. So we are looking very forward to 
continuing these discussions. We thank Secretary Moniz for his 
response to our letter so promptly. We are delighted with the 
work you have been doing to advance a more robust scientific 
exploratory environment in a way that unleashes the American 
competitiveness.
    I thank the witnesses for their valuable testimony and the 
members for their questions. The members of the committee may 
have additional questions for you, and we will ask you to 
respond to those in writing. The record will remain open for 
two weeks for additional comments and written questions from 
the members.
    Again, with our considerable thanks, the witnesses are 
excused and this hearing is adjourned.
    [Whereupon, at 11:05 a.m., the Subcommittee was adjourned.]




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                 
